November 24, 2014

How much is car insurance?

Car insurance can be as cheap as $25 per month or as expensive as $2,000 per month. The price of auto insurance depends on many factors. In 26 states, this includes your credit score. [1]  Some of these factors sound like they aren’t the insurance company’s business. However, The National Association of Insurance Commissioners allows insurance companies to base their rates on these factors. Don’t lie about any of this. Lying on your insurance application invalidates your insurance policy. (Explanations below this video)

Video: Geoff Gordon – Factors that Affect How Much You Pay for Car Insurance

Age or Birth Date

Sixteen-year-old drivers get in ten times as many car accidents as drivers in their thirties. [3] Age plays a big part in how much it is going to cost the insurance company to have you as a customer, on average, so they want your date of birth.

Sex: Man or Woman

Men cause more serious accidents when they drive. Men die 77 percent more of the time when they drive. [4] Men pay higher insurance premiums.

Address Where You Garage Your Car at Night

We all know that some neighborhoods have lots of crime while others are safer. Also, there are more accidents in the city than in the country or the suburbs. [5] Insurance companies factor in your zip code, when determining how much to charge you.

Driving Record / Criminal Record

The more tickets, accidents and arrests you have on your record, the more you are going to pay. You will also pay more if you have made or caused many claims in the past, even if the accidents were not reported to the police. All insurance companies in the US put all their claims into a database that they all look at. This is mandated by the NAIC.

Married or Single

Married people tend to cause fewer accidents than single people. Married people pay less to insure their cars.

Household

Young people get insurance cheaper if they get added onto their parents’ insurance policy than if they get their own, usually. [6] Of course, parents who add their teen drivers to their policy pay more. Some insurers check the driving records of everyone you live with. Others just specify which drivers are insured while driving your car.

Car Year, Make and Model

A new car is more expensive to fix and insure than an old car. A Mercedes is more expensive to replace and insure than a Nissan. A Humvee rear-ends other cars much harder than a Triumph, and costs more to insure. If you are making payments on your car, then your lender will probably make you get collision coverage. This is optional on cars you have paid off.

Miles Driven to Work or School

The farther you drive, the more chances you have to get in an accident. If get good grades you can get discounts for being a student. Almost no one insures you while delivering pizzas — just a word to the wise.

Coverage

Basic liability insurance by itself costs less than if you add any combination of other available coverages: collision, comprehensive, Medical payments, uninsured motorist, personal injury protection, towing, rental. Also, the higher the limits you place on your coverages, the more they cost. You can offset this a bit by choosing high deductibles. These lower the amount you pay, but you have to pay the shop your deductible before your insurance pays anything.

Smoking

Smokers get in more accidents because they are fiddling with their cigarettes. Sometimes they drop them and are looking down on the floor instead of at the road. Sometimes they are coughing so much they can’t pay attention to traffic. Smokers pay more for their insurance than non-smokers pay.

Resources

[1] Staho:Auto Insurance Specialists Deny Low Auto Insurance Based on Credit Score

[2] Accident Attorneys: Why Automobile Insurance Claims are Rejected

[3] Video: Insurance Institute for Highway Safety: Young Drivers, The High Risk Years

[4] MSNBC: Women Drivers? They’re Safer Than Men

[5] State of New Hampshire Insurance Department: Your Guide to Understanding Auto Insurance

[6] Mississippi Insurance Department: Automobile Insurance Consumer’s Guide

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